October 15th, 2009
Alamo Drafthouse news coverage misunderstands some critics

Local Government Watch – San Marcos
COMMENTARY by LAMAR W. HANKINS

The Austin American-Statesman published a news item last Monday (October 12, 2009) which suggested that critics of the recent economic development package for the re-development of Springtown Mall objected to the size of the incentives and a perceived slight toward the downtown entertainment district because the package includes the Alamo Drafthouse, a movie/restaurant venue. But these are not the only concerns, nor are they the most important.

Economic development incentives, whether direct or through a development project that includes Alamo, are not needed for Alamo to locate in San Marcos. For two reasons, Alamo should not receive incentives to locate here. First, economic incentives should never be given to businesses that will directly compete with existing businesses. Second, no incentives should ever be offered to businesses and projects that will come to San Marcos without incentives, which appears to be the situation with Alamo.

It is counter-productive public policy to give away taxpayer money for projects that will hurt existing businesses. And there is no good public policy reason to give away money unless that is the only way to secure a project or business that will make an important contribution to the city. While many of us may enjoy the Alamo Drafthouse and want one at a location more convenient to us than Austin, that is no reason to have the taxpayers subsidize its development. Our personal recreation preferences do not translate into good public policy.

For the last twenty years, our city council has been giving incentives to businesses and projects that would have come to San Marcos with or without the incentives because it made good business sense. This was true of the first outlet mall. It would have located here without any incentives. We know this because after the council voted them millions in incentives, enough citizens objected that a referendum election was held to revoke the incentives. During the referendum petition drive and pre-election period, which lasted over six months, the developer did not cease construction to wait for the voters’ decision. By the time of the vote, the project was nearly complete. If it had lost the incentives in that election, it would have opened its doors anyway. The city council and the citizens were taken for a ride and we continue to subsidize advertising for the malls to the tune of $500,000 a year.

The only reason the two malls came to San Marcos is our location: on IH-35 between the large population centers of Austin and San Antonio, with easy access to the shopping centers for middle-income Mexican citizens who provide significant revenue for the malls. The land costs were reasonable and access to utilities was guaranteed. The taxpayer subsidy they received was not only unnecessary to attract the malls, it was an unwarranted giveaway of taxpayer funds by a city council that was manipulated by ambitious politicians who wanted to take political credit for the malls.

Something similar is going on with the Alamo Drafthouse and Springtown re-development incentives being promoted by the mayor and her coterie on the council and supporters at the San Marcos Chamber of Commerce.



Now, according to the Austin American-Statesman, “Neil Billingsley-Michaelsen, president of Triple Tap Ventures LLC (is) planning to expand the Alamo into San Marcos, Houston and other cities.” And Springtown is not the only possible location in San Marcos for the Alamo. “Billingsley-Michaelsen said Wednesday that the company has looked at several sites in San Marcos. He wouldn’t comment on any specific site in town and said no developer has been selected. Regardless of where the theater ends up, Billingsley-Michaelsen said his company is thrilled to bring it to San Marcos, especially with the more than 30,000 students enrolled at Texas State University there.”

The Statesman article quoted the developer: “San Marcos is a place we think would be great for the Alamo Drafthouse. … The overall package fits our demographic really well.” There you have it in a nutshell. There is no public policy argument made here that Alamo Drafthouse will be good for San Marcos. Unless that case can be made convincingly, taxpayer money should not be given to them at the whim of economic development promoters.

Alamo Drafthouse wants to come here because San Marcos has the characteristics its owners believe will make it successful. If it is a good business decision, it will not need public subsidies and it should not get them because it will compete with other existing businesses in town for everyone’s entertainment dollar. Giving them public money is unfair to those existing businesses. More important, Alamo Drafthouse will not pay its employees a living wage, about $17 per hour in San Marcos for a wage earner with a family of four. No incentive should ever be given to a business that will not pay all employees a living wage. Such a practice is a misuse of taxpayer money because it provides no increased value to the taxpayers.

The mindset that we have to give away taxpayer money to attract businesses is another facet of the national game of bailing out businesses that are failing. These businesses have learned how to game our system of government into subsidizing them under some ludicrous notion of free enterprise. If taxpayers have to pay supposed entrepreneurs to start a business, the enterprise isn’t free, except in the sense that the business is free to extort and spend my money and yours. And the business owners are not entrepreneurs–they might organize and manage, but they don’t assume the risk. They ask the taxpayers to share that risk with them, but taxpayers have no ownership interest and do not get to participate in the profits, if any.

It is past time for us to get some San Marcos City Council members who don’t see the public treasury as a trough from which to feed the economic development hogs who can smell the public’s money just waiting to be consumed to satisfy their voracious appetites.

Sadly, in this current crop of city council candidates I see none among them who is not part and parcel of the economic development scam that has been going on for over two decades in San Marcos. If I am wrong about this, I hope that candidate or candidates will make their positions on economic development clear, so that the voters will know that they have a choice beyond just another economic development crony for the mayor and the chamber of commerce.

LAMAR W. HANKINS is a former San Marcos city attorney. His “Freethought San Marcos” column runs on Mondays. His “Local Government Watch” column runs on occassional Thursdays.

© Local Government Watch–San Marcos, Lamar W. Hankins